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Who can sell a Texas distribution company with recurring B2B customers?
Who sells a Texas distributor, how to prove business customers really reorder, and the supplier and inventory issues buyers probe.
By Michael D. Rubin, CEO & Founder · September 2026 · 924 words
A Texas distribution company with recurring B2B customers is best sold by a sell-side M&A advisor that knows distribution and wholesale, such as MDR & Associates, which counts distribution among its core industries. Business customers who reorder year after year are one of the most attractive things a distributor can offer a buyer, but only if you can prove the orders really recur and that the supplier relationships behind them will survive a change of ownership.
Here is what buyers of distributors look at, and how to present your company so its recurring revenue gets full credit.
Prove that the revenue recurs
In distribution, recurring rarely means long contracts. It usually means the same customers reorder month after month. Buyers want to see that in data rather than take it on trust. Prepare:
- Revenue by customer for three years, showing how many customers bought each year and how many came back.
- Order frequency for your top accounts, so a buyer can see steady reordering rather than occasional large buys.
- Any supply agreements, approved-vendor status or arrangements where you manage stock for a customer.
- Customer concentration: the share of revenue from your top five and top ten customers.
- Gross margin by customer or product line, so buyers can see which repeat business is actually profitable.
Why this data matters so much
A buyer of a distributor is really buying two sets of relationships: customers who keep ordering and suppliers who keep shipping. Everything else, the warehouse, the trucks and the software, can be replaced. So the buyer's central question is how many of those relationships will still be there a year after closing. Three years of clean customer data answers that far better than any description in a marketing package, and it gives your advisor something concrete to defend when a buyer argues for a lower price. If your system cannot produce these reports easily, start building them now; it is one of the most useful things a distribution owner can do before a sale.
Supplier lines can matter as much as customers
A distributor's value often rests on the lines it carries. Buyers will ask whether you hold exclusive or preferred territories, whether those agreements are in writing, and whether a supplier can cancel or must approve a new owner. A change-of-control clause is a contract term that lets the other party end or renegotiate an agreement if the company is sold. If your most important line could walk away at closing, a buyer will either lower the price or make part of it depend on the supplier staying.
Review these agreements with your attorney before going to market, and consider whether key suppliers should be approached, with care and at the right moment, once a buyer is chosen. Handled well, a supplier's early support can make a buyer more confident, not less.
Inventory and working capital
Distribution is a working-capital business, so this is where many deals are won or lost after the price is agreed. Buyers expect a normal level of working capital, meaning receivables plus inventory less what you owe suppliers, to be left in the company at closing. That agreed level is called the working capital peg, and if you deliver less, the price is reduced to match. Because distributors carry a lot of inventory, the peg can move the final number more than owners expect.
Inventory quality matters as much as quantity. Slow-moving and obsolete stock will be discounted or excluded, so write it down or clear it before the sale rather than letting a buyer find it in due diligence. Our long read on why sales fall apart in due diligence covers this and other late surprises.
What drives the value of a distributor
For companies with $3 million to $100 million in revenue, buyers most often pay three to seven times adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, restated to remove the owner's personal and one-time costs). These factors decide where a distributor lands in that range, and a business valuation will show you where yours sits:
| Factor | Buyers pay more when | Buyers pay less when |
|---|---|---|
| Customer retention | Most customers reorder year after year | Revenue depends on finding new customers each year |
| Supplier relationships | Written, long-standing and transferable | Informal, or cancelable on a sale |
| Margins | Gross margins are stable over time | A few large accounts squeeze margins |
| Inventory | Current and turning steadily | Aged or obsolete stock |
| Systems | Order and inventory data are reliable | Knowledge lives in the owner's head |
| Facility | The lease has enough term left to transfer | A short lease with no plan |
Who buys distributors
Buyers include larger distributors adding territory or product lines, manufacturers moving closer to their end customers, private equity groups building distribution platforms, and experienced individual buyers. Strategic buyers can sometimes pay more because they can combine warehouses, purchasing and delivery routes. A good process puts several of these in front of you at the same time, so you can see which kind values your company most.
How MDR & Associates sells distribution companies
MDR & Associates has sold distribution and wholesale businesses in Texas, including U-Fix-It Appliance Parts, which appears on our results page; our distribution page has more. We prepare a financial recast that shows your recurring customer base clearly, present the company to our own database of qualified buyers, capital groups and private equity groups under strict confidentiality, and negotiate multiple letters of intent at the same time. The fee is a success fee, owed only if the company sells. Start with the free valuation snapshot.
Where this fitsSelling a distribution company in Texas →